Avery Dennison Corp. Reports Operating Results (10-Q)
Avery Dennison Corp. has a market cap of $3.98 billion; its shares were traded at around $36.06 with a P/E ratio of 12.9 and P/S ratio of 0.7. The dividend yield of Avery Dennison Corp. stocks is 2.2%.AVY is in the portfolios of Richard Snow of Snow Capital Management, L.P., Brian Rogers of T Rowe Price Equity Income Fund, PRIMECAP Management, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Manning & Napier Advisors, Inc, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Net income increased approximately $44 million and $998 million in the second quarter and first six months of 2010, respectively, compared to the same periods in 2009. Net loss in 2009 included an impairment of goodwill and indefinite-lived intangible assets totaling $832 million.
In the fourth quarter of 2008, we initiated a series of restructuring actions that generated approximately $180 million in annualized savings by the end of the second quarter of 2010. We realized actual savings, net of transition costs, of $75 million in 2009 and an incremental $47 million in the first half of 2010. We expect to incur approximately $155 million in restructuring charges associated with these actions, of which approximately $110 million represents cash charges.
The effective tax rate for the first six months of 2010 was approximately 32%. For the same period in 2009, the effective tax rate of approximately 2%, which, when applied to the loss, resulted in a tax benefit. The effective tax rate for the first six months of 2010 included an immaterial net impact from discrete events, as the $3 million benefit in the first quarter of 2010 was offset by the $3 million expense in the second quarter of 2010. Discrete events are primarily related to tax contingencies, statutory tax rate changes and the release of certain valuation allowances. Refer to Note 10, Taxes Based on Income, to the unaudited Condensed Consolidated Financial Statements for further information.
We anticipate restructuring charges and other items included in Other expense, net to be approximately $15 million to $20 million. We expect to realize an incremental $70 million of restructuring savings, net of transition costs, from the Q4 2008 2010 Actions.
We anticipate our capital and software expenditures to be in the range of $125 million to $150 million.
In the second quarter of 2010, Other expense, net consisted of charges for severance and related costs due to the reduction in headcount of approximately 50 positions in all segments and geographic regions, and asset impairment charges in the Retail Information Services segment. Other items included a loss from curtailment and settlement of a foreign pension obligation ($1.9 million) and a loss from debt extinguishment ($1.2 million), partially offset by a gain on sale of investment ($.5 million) and a net gain on legal settlements ($.5 million)
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